TAX CREDITS: Explanation of the £25k disregard

kerryi27

Ive just read the sticky about this and Im trying to get my head round it.
I am on maternity leave this year so our annual household income for this year is going to be about 22000. Am I right in thinking I say nothing to tax credits in April , let them base my current year 09-10 on previous year 08-09 (what we are earning now) and as long as we dont earn over 25000 more this year than last, they will overpay us and we wont have to pay anything back?

Do you just not say anything until you give them your P60 in July?

Does this mean we would get no help the next year though as they have overpaid us.


Will this also stand for the childcare element also?

its hardly going to be worth me working by the time we have covered the childcare costs but I have to go back as I know we will feel the benefit when she does start school and we dont have to pay the childcare anymore.

kerryi27

can anyone shed any light on this for me please?

wobin

Hi Kerry,
The best thing to do to keep your tax credits up to date is to keep them informed of changes in your circumstances as and when they happen.

A change of address, work hours, employer, childcare provider, childcare costs up or down by £10/wk or more, new baby and change of income.

Some people always over estimate their household income by £10k or more to ensure they are not overpaid. If you can survive on your income then it is always nice to have a nice one off payment at the end of the year to balance your award.

If last year's income was £25k and you tell them this year will be £22k then your award will be based on this year (the lower of the 2) and your pymtsare likely to increase. If you wait until you get your P60 to declare the new income it means that you may get a one off payment once your annual declaration is completed to bring your award up to date.

Be aware - If you make alot of changes to your income during the tax year the £25k disregard doesn't apply and they then base your tax credits on the income you have declared for the current year.

hth a little

Rince

Hi Glenn, you're best cutting and pasting your query into a new thread as this is the sticky about the 25K disregard which is nothing to do with earning 25K. Someone will be along to advise i'm sure :rolleyes:

peediedj

i estimated the same for this years tc as i got last year,but wife just got a payrise,so i have informed them last week,now wife will earn £1800(roughly) more by the time april comes,will my tc still be ok until april,then go down after april due to this?

flea72

Cinque-mummy wrote: »

Sorry, but I'm still confused ... We've not claimed child tax credits before the 09/10 tax year because our income was too high. However, at the beginning of 2009 my husband lost his job so from April 09 we became eligible to to claim. At that time he had no work, so we based our claim on my pretty low self-employed earnings, plus an allowance for the odd bit of contract work he was picking up. Since then he's had a three month self-employed contract, which might be extended for another 3 months. By my rough reckoning, if his contracts do carry on, we will have underestimated our income by about £11,000, but, equally, his contract could be cancelled tomorrow and our original estimate won't be that far off if he didn't manage to replace it.

Because we have no previous year's income to go on, what would they base any overpayment estimate on? I should mention that they have already withheld £2000 from the award because our figures are estimates.

We really won't have a clear idea of our income until the end of the tax year - should I tell the tax credit office that at the moment our income looks higher than our original estimate and have our credits reduced? But what would then happen if hubbie's contracts aren't renewed? Will they up the credits again? Is there anywhere that I can calculate what we might have been overpaid? Any help really gratefully received.

Ok, in situations likes this, its best to nofity tax credits each time you have a change, as that way they will amend your notice, to suit your current income, so you shouldnt build up any overpayments

Im surprised you had to estimate your income, as if you didnt start claiming until April 09, your OH would have had an 08/09 P60 to work his figures from, and you would most likely have had y/e accounts to work from

Then once you were in the system, based on those figures, you would then contact them with a change of circumstances, stating your OH no longer had an income, at which point they would have amended your income/entitlement

For tax credits to say, you dont have to inform them of a £25k change in income is just so they dont have to do such much paperwork, amending awards - its has nothing to do with being able to earn £25k more, and it wont affect your entitlement, it does

F

kerryi27

sorry, im still struggling with this, I am currently on maternity ;leave so next year my wages will be about 9k higher than this year.
If I advise them of this will they still disregard the 25k or is it only if you dont tell them and let them know after they have paid you the higher rate?

mitchaa

No, No, No, No, Noooooooooooooooooo.

Why dont £40k earners 'estimate' their incomes at £15,001 and then be subsequently protected by the £25k disregard?

Earning £40k pa but yet getting tax credits based on only earning £15k

Say I earned £40k in 09/10 and I received the standard £545 CTC award yearly, my 10/11 award would be based on this £40k and I'd get the same £545pa. However, I phone them up, say wage has dropped and that my 10/11 earnings will now be £15,001. New tax credit award comes through and im now getting paid a hell of a lot more than £545 as my new award has been calculated on the lower amount. April 2011 comes along, ive earned £40k but am protected by the £25k disregard.

That is wrong.

Subsonic...I think you should make it a little clearer in your posts as so many people are caught out by this and end up with massive overpayments.

kerryi27

I wont be ringing them to say my wages have dropped though. My income for this year will be used to calculate next years award. My wages are going to be more next year!
If I ring them and tell them will they still base my award on 09/10 income or will they reduce my payments to come in line with what i will be making 10/11

[Deleted User]

Read the sticky about the £25k disregard at the top of the forum.